Teachers still aren't paid well. The average starting salary is $30k-$35k.Way back when, teachers were not paid well, but the time off was considered compensation and let's face it, public education is paid for by the taxpayers, so you have limited means. Most extracurriculars occur after school, so it just made sense to hire teachers to coach and it was supplemental income for them. Some coaches had little to no experience in the sports they coached, they just figured it out.
Now I will say the demand on "off season" stuff has exploded over the last 30 years and coaches are not paid anywhere near enough for the time allotted.